Bloomberg News

Vale Pays $1.1 Billion to Increase Fertilizer Unit Stake

December 13, 2011

Dec. 13 (Bloomberg) -- Vale SA, the world’s second-biggest mining company by market value, paid 2.08 billion reais ($1.1 billion) to boost its stake in fertilizer producer Vale Fertilizantes SA amid strong growth in agriculture.

Vale now holds 99.99 percent of the total common shares of the company through a subsidiary, the company said yesterday in a statement.

Vale plans to dedicate almost 10 percent of its $21.4 billion investments for next year to the fertilizers business as it seeks to meet rising demand for crop nutrients in Brazil, the world’s biggest grower of sugar cane, coffee and oranges.

“It’s a sector that has a strong capacity for growth, agriculture is robust in a moment of uncertainty,” Rogerio Freitas, who manages about $50 million at Teorica Investimentos, said in a telephone interview from Rio de Janeiro yesterday.

Agriculture output grew 6.9 percent in the third quarter from a year ago, the fastest growing industry in Brazil and more than triple the 2.1 percent expansion of the overall economy. The fertilizers unit accounted for $1.04 billion, or about 6.2 percent, of Vale’s operating revenue during the third quarter, the company said Oct. 26.

Vale announced June 22 its proposal to buy all the outstanding shares of its fertilizers unit for 25 reais each, canceling a previous plan for an initial public offering of the unit. The company bought assets worth about $5.8 billion for its fertilizer unit last year.

Vale produced 166,000 metric tons of potash and 1.93 million tons of phosphate rock last year. The company targets output of 650,000 tons of potash and 8 million metric tons of phosphate rock next year, according to a Nov. 28 statement.

Vale fell 1.5 percent to 38.55 reais in Sao Paulo trading yesterday, extending a 21 percent decline this year.

--With assistance from Juan Pablo Spinetto in Rio de Janeiro. Editors: Rebecca Keenan, Andrew Hobbs

To contact the reporter on this story: Peter Millard in Rio de Janeiro at

To contact the editor responsible for this story: Dale Crofts at

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